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Fibonacci Timeframes

Discussion in 'Traders Glossary' started by Cyclon, Jul 2, 2008.

  1. Cyclon

    Cyclon Company Representative

    Joined:
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    Fibonacci Timeframes is a term that has two distinct usages.

    USAGE 1:

    The most common one refers to periods of time or quantities of bars that are representative of one of the Fibonacci Number series. These periods are used in technical analysis to coordinate likely time and event synchronization.

    This is a fairly obscure technique, being usually employed by only small subsets of Cyclic and Elliott Wave Technicians. This method frequently uses a margin of error in the neighborhood of 5 percent of the time unit.
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    USAGE 2:

    The other meaning refers to an even more obscure yet effective application of Fibonacci Ratios which modulates significant Fibonacci values of indicators. This Fibonacci purist technique is done in order to compensate a general lack in charting packages of an essential implementation of Fibonacci based data bar sets.

    The modified indicator values simulate the existence of Fibonacci data bar timeframes. For example a commonly used 200 period exponential moving average or 200 EMA might be first improved by changing it to a near Fibonacci relative such as 220 ( 2 x 2 x 55 ).

    Further enhancement to reach the maximum Fibonacci implementation would modulate the number by a Fibonacci Ratio such as 1.618 which would change the value to 356 and this would then be placed on a chart.

    The results yield the same VIEWPOINT as if your broker had Fibonnacci Timeframes available. The benefit of this technique is tuning technical analysis to the frequencies on which the whole behavior of markets is based.
     

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